Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
I am happy to report that today I closed on a 240 unit apartment complex in Atlanta, GA that I bought for $9.4 million and it appraised for $9.9 million. Capital raise was $3 million and my investors are super excited!!
Real Estate Investor · Littleton, CO · Member since 2013 · 197 posts · 77 votes
10y
@Brian Adams
Congratulations! Would you mind sharing some details, rents, debt service how you put the deal together? Thanks in advance and great to see you getting deals done.
Brian may do things a little differently, but when we underwrite a property, we look at economic vacancy - which takes into consideration tenants not paying, evictions, concessions (i.e. 12th month free), etc - and not just physical vacancy (which you will learn is the easiest kind with which to deal).
Rental Property Investor · Northville, MI · Member since 2013 · 263 posts · 183 votes
10y
@Brian Adams, I'm glad it worked out so we participate as investors in this project. We look forward to your updates as you renovate and reposition this property. Best wishes.
I was just wondering if you know the requirements to invest in your group as an international investor. Do I need apply for something to invest in big complexes like your group? And I have another question. I checked your website and it was quit interesting and I was wondering on how to check on the investment your group planning to invest in. Lastly could explain how your group is different that the crowdfunding websites.
Investor · Carlsbad, CA · Member since 2015 · 27 posts · 11 votes
10y
Thanks Brian! Take my following comments with a grain of salt as, based on the fact that your previous deal has fully funded and you have received great response from your fellow Bpers in this thread, you are clearly already on point with how you are pitching your deals.
Yes, I get that there is a point where information overload would distract and possibly lead to quicker tune-out from some potential investors but do think it is extremely valuable when an operator demonstrates his knowledge of a deal beyond just the top line selling points within the body of their pitch. Every deal has risk. Real risk. There is a reason the entity from whom you're buying the project has decided now is the right time to SELL and not BUY. He's getting out of there while the getting's good from his perspective.
I do realize that there are a lot of investors out there who are simply going to be attracted to a pitch that points out all the amazing things about the deal. I would just point out that there is a class of investors out here who are going to be much MORE impressed by the operator who spends some time talking about the risks, showing that they fully understand those risks and demonstrating that they have a better game plan than the former operator to successfully mitigate those risks.
I love that term "economic occupancy". For me, an operator who would include that and explain it/contrast it against the plain occupancy number as part of their top line pitch would immediately move to the top of the stack for me. It's just one more line on the fact sheet and it demonstrates the operator's understanding of the real numbers that matter in a deal.
Especially with so many deals out there and so many that look the same. "We will manage the property better than the former operator, the former operator missed the opportunity to raise rents, we will make a few fixes/upgrades, kick out the old tenants and replace them with newer, shinier tenants willing to pay a premium for the updated units." I get it. It all sounds good on paper. But help me understand why the former operator decided to give up and sell instead of taking this approach themselves. Why you can do what the former operator could not or had decided it wasn't worth their effort trying.
Most pitches I see offer 2 completely contrasting sections. A high level view that states, "look at this no-brainer deal where I am being more conservative than I need to be and you're still going to get paid a great return." And then the required PPM risk factor disclosures all written in legal ease that point out every single thing that can and probably will go wrong including the very real possibility of alien life forms taking over the planet (a bit of an exaggeration but you know what I mean).
I thank you for your time and for writing back to my previous post. As mentioned at the start, you clearly don't need my advice on how to package up your information and I congratulate you for your success. Just the time, effort and skill involved in putting any successful syndication together is praise worth at the very highest level. I just thought it was important to point out that there are those of us out here in the would-be-investors world who do crave a more thorough and detailed top line analysis as we sort thru all of the various opportunities that exist. We have worked hard to accumulate a little bit of wealth by being smart and probably pretty conservative over the years and crave the opportunity to invest with an operator who demonstrates that they are intimately familiar with all of the potential risks and has the ability and resource to mitigate them. Thanks again!
Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
10y
@Abdulaziz Albahrani, I see you are from Wilkes-Barre, PA, I played college football at Wilkes University.
Thanks for your questions. My deals are setup for accredited investors and to date haven't had any international investors so would need to look into the rules.
The best way for us to keep in touch and to learn about my approach and deals is to PM me or go to the BP market place and download my FREE guide. Here is the link Why Apartments are the IDEAL Investment. (Hopefully the folks at BP don't have a problem with me making a plug here).
The biggest difference in my deals vs. crowdfunding is how the private offering is structured.
Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
10y
@Drew McLaren, I get what you are saying and in my response to you, I didn't mean to gloss over the importance of the operator demonstrating expert knowledge to the investor.
The dollars invested are significant and we are playing in a big boy's game.
I still have lots to learn and I appreciate your thoughtful response. When I put my next offering together, which might be coming out in a couple months, I will definitely consider your suggestions.
Investor/Syndicator · Downers Grove, IL · Member since 2014 · 80 posts · 78 votes
10y
@Drew McLaren In defense of @Brian Adams, why a seller would choose to sell a property is many times unknown and unknowable. If you were told by the seller or their broker their motivation to sell, I would take it with a grain of salt. Knowledge of the true reason they have to sell would give the buyer a better negotiating position. There are countless motivations for a seller, many that have nothing to do with the physical asset. It could be events in their lives that require them to need money, they could be close to retirement and not want the hassle (they could be young with growing families and not want the hassle), they may think the market is fully valued, they may have read that New York City class A rents are falling and take that as a bellwether for the market, they may want to trade up into a larger deal, etc.
Regarding your question about why the prior owner did not complete the upgrade program and capitalize on the higher rents, it is very common that the existing owner is undercapitalized and there is not enough cash flow (after the owner takes their draw) to pay for improvements. So stuff that seems obvious to investors' fresh eyes are left undone. Deferred maintenance and missed opportunities lie everywhere. A skilled sponsor's job is to find those that can make them the largest possible return and the lowest possible risk.
Investor · Carlsbad, CA · Member since 2015 · 27 posts · 11 votes
10y
@Brian Moore Hopefully @Brian Adams doesn't feel the need to be defended. I was speaking in generalities about the way most deals are presented and definitely not specifically about any deals of his. I have not ever seen any of his deals so have no frame of reference by which to judge so please know that all of my commentary and opinion is a generalization for the average deal I see cross my desk. For whatever reason, this topic struck a cord with me and motivated me to point out some things that would, for me at least, really help a proposal stand out from the crowd.
I feel that I've probably already hijacked this thread enough from where it was originally going so will step out now.
Denver, CO · Member since 2012 · 39 posts · 20 votes
10y
@Brian Adams congrats! Way to go after you goals! I read your post about how you were able to quit as a CPA and was wondering what were the most important books you read to help you get to where you are today? Thanks!
What a coincidence I'm currently a student at Wilkes university. Thank you for the great info. Please inform me when you check about how can international investors can invest in your group. And could you explain how is private offering different between your investing group and crowdfunding websites.
Attorney · Nashville, TN · Member since 2015 · 1k+ posts · 1k+ votes
10y
Hi @Abdulaziz Albahrani --- if you were a U.S. citizen, you must be an accredited investor to invest in a @Brian Adams project. I'm not a securities lawyer, but you typically would either need: (1) a net worth of $1 million; or (2) an annual income of $200,000 per year for at least two years.
For foreign investors, the answer is a bit more complicated. You can again qualify as an accredited investor, but I believe the law requires extra steps for an foreign investor to invest in a Regulation D project. Someone like Brian could also make a Regulation S offering, but there are many reasons why someone like Brian wouldn't do that.
Also relevant is the law of the investor’s home country. As someone with family and assets in another country, I can tell you that it’s not easy trying to comply with laws of two countries. Especially with tax matters.
So if you are serious about investing into these projects, you need to speak to a law firm that is: (1) familiar with securities law; and (2) the laws of your country. You will pay a LOT in legal fees, but for a good reason --- this is complicated stuff!
Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
10y
I am a CPA myself, Pure Unadalterated Hell! As you may have guessed accounting is not for me. I have seen you here before and know your story. It is a great one. I know of many people who want more. Congrats on being one of the people who got it! Did you get most of your connections from the contacts you made as a CPA?
Wholesaler · San Diego, CA · Member since 2016 · 19 posts · 4 votes
10y
Hi Brian, inspirational. Thanks for sharing your success. I have my first deal (a small deal) - 18 units under contract. Contract purchase price is $470k. Purchase cap rate is 12.5%. At a Market cap rate is 9%, the property value is $653k with 11% vacancy and 40% OE. Upside in rents.
I am networking everywhere, trying to raise private money. I have people interested, but no one to the table yet.
Attorney · Los Angeles, CA · Member since 2016 · 284 posts · 314 votes
10y
@Abdulaziz Albahrani There isn't a whole lot of difference between "crowdfunding" and traditional real estate syndication except that the former is done online. If it's a regulation D offering, that does allow for certain international investors who are accredited. Reg S is another method to consider when one has international investors in mind. How one structures these offerings depends on the sponsor's goals and the specifics of the project.
I heard that your investment group is investing in buying and flipping properties other than big complexes that need only accredited investors. Could you explain how you are investing in these properties? Is your group buying these properties as group or it will be available for only one investors because its a small property other than big complexes?
Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
10y
Wanted to give a quick 2 month update since closing on this 240 unit deal on April 7th.
At closing the occupancy was 93%.
On April 8th, I increased the base rents on lease renewals and new leases between $20-30.
It has been somewhat of a surprise that our occupancy surged after we raised rents. We are now 99%, but I anticipate occupancy dropping as we transition "non-paying" tenants out of the property. Once we do the clean-out process, we will rebuild our rent roll with qualified tenants at higher rental rates.
We have started the interior upgrade package and here are a couple pics of what we have done such as painting the cabinets, modern hardware, new flooring, new black stove and refrig, new lighting and ceiling fans, etc.
I projected in my numbers a rent premium of $50 to $75 on the upgraded units. Today (6/10/16) we just got this upgraded unit leased at the $75 so this is very good news.